I can't speak for the U.K. but here in the U.S., credit unions (which I believe would be the equivalent) generally offer better interest rates on loans and savings because they are non profit organizations. Over the past decade, commercial banks have put a lot of pressure on Congress to change some of the rules pertaining to credit unions so that their advantages have been weakened or eliminated altogether, which is a shame. So we're seeing less difference between credit unions and banks than we had, say, in the eighties and nineties.

Quoting Baexecutive (Thread starter):What is the point of them? I've never seen the relevance, its not like they give fantastic interest rates and anyway I could really care less who owns the company, its customers or shareholders.

Any ideas what will happen to them in the next few years?

They do tend to give better interest rates, even if only marginally, and often a better range of savings accounts too. In my experience it seems that they put more emphasis on customer service than the high street banks; when I walk into a bank these days (and I know that not all banks are the same), I notice a quite obvious lack of attention and interest in dealing with me, as a non-business, non-premier account holder. I've never felt like that in any of the building societies I've ever dealt with.

It's interesting to see that a fair few of the building societies that turned into banks in the great demutualisation drive (in search of a quick windfall buck for their members-turned-shareholdershave started to suffer; Northern Rock, Bradford and Bingley, and Alliance and Leicester come to mind...

Have you ever felt like you could float into the sky / like the laws of physics simply don't apply?

Quoting IH8BY (Reply 2):It's interesting to see that a fair few of the building societies that turned into banks in the great demutualisation drive (in search of a quick windfall buck for their members-turned-shareholdershave started to suffer; Northern Rock, Bradford and Bingley, and Alliance and Leicester come to mind...

Building societies suffer in an environment like this not because they have demutualized but because they have very little diversification and are (sometimes forced by law) extraordinarily exposed to a specific sector of the economy (real estate) that is volatile.

The reason they are able to compete with commercial banks and offer depositors higher interest rates is because a lot of times they get a pass on the strict capital requirements banks have. Banking is a scale business so smaller building societies and credit unions will inherently have a disadvantage there. If you consider that the extra service you might or might not get compensates you for the lack of product breadth (not only in terms of savings but also credit cards, investment products, insurance, etc.) and geographical coverage then you might consider it, otherwise if you are globally-minded they do not make much sense.

I know what you mean on the customer service score, you do tend to feel more valued in bs than in banks. On the interest score am not so sure in recent years, HSBC, Barclays, Natwest and LTSB are all offering superior savings rates for customers than the 'big' three building societies.

What do you think the future holds for a building society such as the Yorkshire (being the second biggest but a lot smaller than its rival Nationwide)?

The true equivilent of Building Societies in the USA are Savings Banks or as they are sometime called 'thrift' banks. Since the 1970's considerable deregulation of the American banking industry gave our Savings banks the right to offer checking accounts, personal, car and other loans and other services that only commercial banks could offer. Those changes along with the Savings bank collaspe crises in the mid to late 1980's here (due to bad managment decisions to get into bad investments, making bad loans - just like today) led to many fewer savings banks. Many commercial banks took over some of the failed savings banks to add to thier companies and making them commercial banks. I would note that some savings - thrift banks still exist, including many what we call 'community' banks, usually smaller banking companies with as few as 1 branch, and even some larger regional ones. I know I have all but a small amount of my savings in localy owned 'savings' banks as pay better rates of interest, offer better service, run on conservative values and used locally.